There are certain months when no matter what you do, your pay just isn’t sufficient to last you through the next paycheck. For some people, this happens only in some months. For others, it happens every month for one reason or another. Whether this is due to poor money management, unexpected illness or the sudden loss of a job, coming up financially short each month does happen to a lot of people—and most resort to borrowing to meet the deficiency.
While getting a loan seems to be the standard strategy these days, doing so is not really practical in the long-run. Yes, it will meet your short-term needs. However, it is just going to put you deeper into debt if you are unable to pay off what you have borrowed completely when the due date comes.
Let’s say you’re short $200 a few days before payday. You then resort to borrowing from your credit card which puts an interest of 12 percent per annum. By the time you reach the first month, that loan will have grown because of the interest. In the second month, that will have reached $202. The next month, it will be around $204, so on and so forth. Even if you are careful to make the minimum payments, you’re still going to be stuck with debt on that $100 loan. Imagine what happens if you do it every month!
The situation is even worse when you try to get your advance from payday loans. The terms in these types of loans can be so costly that you will be paying multiple times what you had originally borrowed in the first place.
This is the very reason why budgeting is a very crucial aspect of managing your finances effectively. However, if you still come up short in spite of your best efforts, it is wiser to make a little sacrifice instead of getting loans so you can still meet your needs. Here are things you can do to get through the next few days before your pay arrives:
1. Stock up on food.
Food is a necessity—you can’t continue functioning for long without it. Thus, it’s important to stock up on the staple food items as soon as you receive your pay. Try to observe what your consumption is for one month or for two weeks if you receive your pay biweekly. Then buy enough to last you until the next payday. You can always freeze and store food items in your refrigerator and buy canned goods as well.
When you run short three days before payday, you won’t have to worry about charging groceries to credit or borrowing money to buy food. That is a very important thing that you won’t have to worry about.
2. Minimize the times you eat out.
One of the things which can really derail the family budget is eating out. Think about how many times a week you buy food at a restaurant—even if it’s just cheap fast food fare—then vow to minimize those purchases. Brownbagging your lunch may take a little bit of time on your part each but the savings you make will go a long way towards helping you avoid those few days when you have to resort to borrowing before your next payday comes.
3. Take care of utility bills as soon as your pay comes.
You need the lights and water to keep on running. Thus, make sure that you settle your utility bills right away when your paycheck comes. As much as possible, don’t let them pile up. Not only will you be contending with penalty fees for late payments, it will be nearly impossible to ask the utility firms to give you some time to pay your bills when they come disconnecting at that very inopportune time when you are still waiting for your paycheck to arrive. Your food, water and electricity should be your priorities. Take care of them when you have the money.
1. Try asking family and/or your best friend to sponsor a meal.
If push comes to shove and you’re really caught without any money three days before payday, you can ask people who love you if you can eat some meals at their house. Of course, this isn’t very easy especially if you already have kids. But your mom and dad might be happy enough to host dinner for you and the children one night. Perhaps your best friend who is hopefully more astute about money management can help you out for another meal as well. There might even be a food pantry in your community where you can go to for food. If you’re short for only a day or two, these options are better than borrowing money for food at a great interest.
2. Walk, bike or carpool to work.
If crunch time comes and you can walk your way to work then do so instead of borrowing money for gas. You may also bike your way to the office if that is possible. If it isn’t, try carpooling with a neighbor or someone else who can at least get you closer to your destination so you can walk the rest of the way.
You should also evaluate if it’s your car that’s making budgeting difficult. Remember that you’re not only paying for monthly car payments (if your vehicle is brand new and if you got it on loan) and fuel, you’ll also have to factor in the maintenance and repair expenses. Compare how much you would spend if you used public transportation instead.
3. Postpone other unnecessary purchases.
If you only have a few dollars left in your wallet, it’s still two days before payday and you need to buy new attire for that all-important business presentation, avoid the temptation to charge your new getup to plastic. Scour your closet for decent and presentable attire—you’re bound to find one. If not, you can always borrow something from your best friend. The same goes for shoes, accessories or even gadgets that have just been newly-released. No matter how much of an emergency you believe these purchases to be, avoid the temptation to charge them on your credit card.
4. Stay at home.
When you go out of the house, you’re bound to spend money, no matter how little. Thus, when you know that your funds are getting low, you should stay at home, for as long as you have no work, of course. If your kids are used to going out on weekends, explain the situation to them and have a movie marathon at home instead. What’s important is that you don’t spend a dime when your funds are already in the red and that you don’t borrow merely for entertainment and leisure purposes.
The whole point of this lesson is to emphasize the fact that debt is not something you should fool around with. If you know that you will not be able to pay off the amount you borrowed on time, you should not borrow as much as possible.
This is where budgeting and sticking to your budget becomes vitally important. If you take the time to craft a doable budget, you’re on your way towards avoiding those days when there’s virtually no money left in your wallet before payday comes around.
Another lesson that can be gleaned from these lean times is the importance of saving. You should have an emergency fund in place so you don’t have to borrow when things get rough. The fund should also help cover the costs of unexpected emergencies such as minor car repairs, leaky faucets and others. It is also much better to purchase essentials like food with cash since you don’t have to worry about the interest.
If coming up short has become a habit, take a long hard look at your expenses and try plugging the leaks where you can. Unless you take drastic action about your situation, it’s going to be very difficult for you to break this cyclic action of constantly coming up short days before the paycheck comes. It’s going to be difficult for the next few months while you are making your adjustments, especially when it comes to trimming down your leisure expenses. When you see the results of your sacrifice—having an emergency savings fund in place and not worrying about whether you’ll have money on the final days before your salary arrives—you’ll be happy you did.
Always keep in mind that being in debt is not a good idea at all. If you borrow from relatives or friends and can’t repay when you say you will, you will eventually ruin precious relationships that have taken years to build. Discipline yourself to stay out of debt. Follow a budget, avoid extraneous expenses and have an emergency fund on hand. By keeping these in mind, you won’t have to worry about getting loans just to fill in those couple of days before the next paycheck comes.